5 tips to control capital spending

As millions of folks across the country are hitting the gym to trim up for summer, hospitals are also looking to trim fat from their budgets as well. Tightening up can be as simple as controlling capital spending, according to John McCarthy, general manager of asset management, GE Healthcare. Here, McCarthy outlines ways in which hospital executives can curb their capital spending, while still being productive and efficient.

1.  Check out your inventory

[See also: Capital spending expected to be tight in 2013]

Ever spend money on something you don’t need? Hospitals do it all the time. Each year, hospitals spend millions of dollars on new equipment they might not need, McCarthy said. Hospital executives must take the time to assess what equipment they do have before making large, potentially unnecessary, purchases of new equipment. RFID tagging can help executives know the location and quantity of certain equipment, which can help effectively plan for purchases.

2.  Redeploy and reallocate underused assets

Before buying or selling a particular asset you may need or have too many of, check and see if other departments within a hospital or hospitals within the health system have a need for that asset or have underused equipment. According to McCarthy, taking an asset from one hospital and simply transporting to another will save executives time and money in the long- and short- term.

3.  Assess service contracts

McCarthy said many executives feel it is necessary to have expensive, 24-hour service contracts on their equipment. While it is important to ensure that your assets have long lifespans, it is also important to make sure that each piece of equipment has an appropriate level of service. For example, a hospital may have a CT scanner reserved for biopsy procedures. If the hospital is paying for 24-hour service coverage on the biopsy unit – even though the unit is only used for a few hours during the day – coverage could be reduced and money saved.

4.  Have a comprehensive plan

Health systems need to have a centralized technology planning process based on data-driven planning, McCarthy said. Operating under different decentralized technology planning processes across multiple hospitals in a health system adds significant costs. Having a comprehensive network five-year technology plan based on data is key.

5.  Be lean

Use the lean methodology to find problem areas that are costing your hospital money. Using lean will help you increase productivity, hospital throughput, equipment utilization, patient safety and the quality of care, while also cutting wasteful spending. U.S. healthcare economics and reform have created a “productivity moment” in today’s hospital environment. Lean methodology and tools allow hospitals to eliminate waste.